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Continued from page 4

Forcing people to buy benefits they might not want

KLEIN: Are you talking about now the employer mandate in there?

ROY: No, I’m talking about the mandates that make the insurance product richer.

KLEIN: Sorry, I just wanted to be clear.

ROY: You’re arguing it’s good that people have a richer insurance [plan].

KLEIN: So just to be clear. You’re saying that if everybody had to do organic food, costs would go up for everybody. And here’s you’re saying everybody has to cover, say, maternity benefits, the costs go up for everybody.

ROY: So the costs go up more, but it’s not clear that the benefit is worth it. So I think you’re argument, and the argument of a lot of people on the left, is more insurance is better. Less cost sharing is better.

KLEIN: Well, up to a point.

ROY: Up to a point, but in general there’s a bias towards less cost sharing. Lower deductibles might—

KLEIN: [interposing] That’s not my bias. And so I think there are two things here, right? One is the cost sharing. If you’re talking about somebody who is not getting a protection at this point, right, you’re talking about cost sharing up to about $6,500 out of pocket for an individual.

ROY: Right.

KLEIN: Now maybe you think that that isn’t enough, right? That’s a lot of cost sharing in a year for most people.

ROY: Yeah.

KLEIN: I mean that would hurt. And—even talking about the kind of people in the individual market. So I always kind of want to hear what the answer is here, right? Do you want it to be $10,000? Is it $15,000? What is the level of deductible at which you said, “Okay, these people are going to feel the pain when they want to go to the doctor”?

And then the other piece of that, which I do think matters here a bit, when we talk about the age rating, right, and when we talk about whether or not the young subsidize the old, and whether or not that’s a fair thing to do, I do think it’s worth saying that it’s not clear how much you would—sorry, that’s actually a separate point.

When you talk about whether or not they will stay in the market, whether or not they will drop out and use the individual mandate, which I totally agree with you, right, on a sheer economic incentive argument, that might be the best deal in the bill. Just pay the individual mandate, wait until you get sick, buy insurance for whatever it will cost. It’s a great deal. But we have to, I think, admit here that we haven’t seen that happen anywhere.

Now in theory that could happen in Switzerland. It could have happened in Massachusetts. It didn’t happen there. So we need to come up with something that is different about America, such that all these kids are going to be dropping out.

Now maybe what’s different is you, right? Maybe what’s different is you and the folks in the Republican Party and a sort of general atmosphere, “This is a terrible bill, and is the right thing to do a kind of almost civil disobedience like approach to it, and just pay the mandate and try to gain the bill?” In which case I would just say, “The answer is you make the mandate harder to gain, and you ratchet it up and ratchet it up.” But maybe you can’t do that politically, so you create a kind of gridlock that ruins the bill.

But it is worth saying that in the past it just isn’t clear. There’s no evidence of young people just saying that they don’t value insurance that much, they don’t want it. I mean when you see pick-up rates of young people and employers, they pick up employer-based health care insurance and pay for it at about the same level as older workers. It’s above 70%.

So I think it’s an economically rational point you make there, and it’s completely true. If young people all decide to pay the individual mandate, the exchanges will completely collapse in on themselves. But we are working here. The way this bill was designed, we are sort of working here with, I think, the best understanding we have of how young people work in the insurance market. If that proves totally wrong, if the world is a different world, then the world to sort of fit all the models that we were in, that would be bad. But we don’t have a reason at the moment to think it is totally wrong.